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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Chinese social network Weibo published its annual report last week. In it was a warning — the same one the company has published regularly since it first went public in New York in 2014 — that its corporate structure is a convoluted workaround to sidestep a Chinese curb on foreign investment in tech. It’s one of more than a hundred companies that can say the same. Grey areas feature prominently in the history of US-Chinese flows.
Sometimes, though, the grey turns suddenly to black and white. Meta Platforms, owner of Facebook, has been ordered by Chinese regulators to unwind its $2bn acquisition of Manus, a maker of AI software. Manus isn’t Chinese, but it used to be: it relocated to Singapore last year, before Meta snapped it up. Legal as that might have been, Beijing sees a “conspiratorial” attempt to spirit valuable technology abroad.
Practices such as “Singapore washing”, as relocating to the city-state for investment reasons is known, or the “variable interest entities” that enable foreign money to enter forbidden sectors, have brought masses of capital to companies that might otherwise have struggled to get off the ground. While China has plenty of tech talent, it’s the US that has the cash. Private investment in AI companies in the US reached $286bn in 2025, according to Stanford University; China mustered just $12.4bn.
All sides can benefit from these wheezes, so long as everyone agrees to accept the ambiguity. In the case of the VIE, which facilitated listings including Alibaba, tolerance has waned somewhat. Chinese companies that use them must get permission before listing abroad, which now rarely comes. Meanwhile, US politicians from both parties, including Democrat Elizabeth Warren and Republican Tim Scott, claim those who already use the VIE structure could be inadvertently advancing Chinese government goals.
AI has changed the calculus further. Unlike social media, ecommerce and gaming, the competition between Chinese and US AI rivals is more direct. A breakthrough from China’s Deepseek just over a year ago sent a justified chill through the US tech sector. China’s top models lag America’s finest, but only by a few months, according to data from ArenaAI. The US already bans high-end chip sales to Chinese companies; for China to demand the unwinding of Meta’s deal is a new twist, but fits the zeitgeist.
All this is most irksome for Meta itself, which had already melded Manus’s teams with its own. There may be a silver lining, though. Meta, Google, OpenAI and their peers have to date escaped federal regulation inhibiting their ability to develop and release ever more potent — and potentially dangerous — models. After all, they can argue, if US companies don’t do it, China will. Anything that drives a bigger wedge gives them a reason to argue that the AI arms race must be allowed to continue unchecked.
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Source:
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